CFS, Inc.Michael Butler, CFA® InstitutePresident/Financial Advisor3190 Whitney AvenueBuilding 6, Suite 2Hamden, CT 06518203-248-1972cfs@cooperfinservices.comwww.cooperfinservices.com

March 2019Quiz: How Much Have You Thought AboutHealth and Health-Care Costs in Retirement?

Four Reasons Your Parents Might Be inFinancial Trouble

How can I get a tax break for child care?

How much does child care really cost?

CFS Advisory NewsletterPlanning Your Financial Future

Due Date Approaches for 2018 Federal Income Tax Returns

See disclaimer on final page

Tax filing season ishere again. If youhaven't done soalready, you'll wantto start pulling thingstogether — thatincludes getting yourhands on a copy ofyour 2017 tax returnand gathering W-2s,1099s, and

deduction records. You'll need these recordswhether you're preparing your own return orpaying someone else to prepare your tax returnfor you.

Don't procrastinateThe filing deadline for most individuals isMonday, April 15, 2019. Residents of Maineand Massachusetts have until April 17, 2019, tofile their 2018 tax return because April 15,2019, is Patriots' Day and April 16, 2019, isEmancipation Day.

Filing for an extensionIf you don't think you're going to be able to fileyour federal income tax return by the due date,you can file for and obtain an extension usingIRS Form 4868, Application for AutomaticExtension of Time to File U.S. IndividualIncome Tax Return. Filing this extension givesyou an additional six months (to October 15,2019) to file your federal income tax return. Youcan also file for an extension electronically —instructions on how to do so can be found in theForm 4868 instructions.

Filing for an automatic extension does notprovide any additional time to pay your tax.When you file for an extension, you have toestimate the amount of tax you will owe andpay this amount by the April filing due date. Ifyou don't pay the amount you've estimated, youmay owe interest and penalties. In fact, if the

IRS believes that your estimate was notreasonable, it may void your extension.

Note: Special rules apply if you're living outsidethe country or serving in the military and onduty outside the United States. In thesecircumstances you are generally allowed anautomatic two-month extension (to June 17,2019) without filing Form 4868, though interestwill be owed on any taxes due that are paidafter the April filing due date. If you served in acombat zone or qualified hazardous duty area,you may be eligible for a longer extension oftime to file.

What if you owe?One of the biggest mistakes you can make isnot filing your return because you owe money.If your return shows a balance due, file and paythe amount due in full by the due date ifpossible. If there's no way that you can paywhat you owe, file the return and pay as muchas you can afford. You'll owe interest andpossibly penalties on the unpaid tax, but you'lllimit the penalties assessed by filing your returnon time, and you may be able to work with theIRS to pay the remaining balance (options caninclude paying the unpaid balance ininstallments).

Expecting a refund?The IRS is stepping up efforts to combatidentity theft and tax refund fraud. New, moreaggressive filters that are intended to curtailfraudulent refunds may inadvertently delaysome legitimate refund requests. In fact, theIRS is now required to hold refunds on all taxreturns claiming the earned income tax credit orthe refundable portion of the child tax credituntil at least February 15.

Most filers, though, can expect a refund checkto be issued within 21 days of the IRS receivinga return. However, delays may be possible dueto the government shutdown.

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Quiz: How Much Have You Thought About Health and Health-CareCosts in Retirement?When planning for retirement, it's important toconsider a wide variety of factors. One of themost important is health and its associatedcosts. Thinking about your future health and therising cost of health care can help you betterplan for retirement in terms of both yourfinances and overall well-being. This quiz canhelp you assess your current knowledge ofhealth and health-care costs in retirement.

Questions1. Health-care costs typically rise faster thanthe rate of inflation.

True.

False.

2. You could need more than $500,000 justto cover health-care costs in retirement.

True.

False.

3. Medicare covers the costs of long-termcare, as well as most other medical costs.

True.

False.

4. The southern, warmer states are generallythe healthiest places for seniors to live.

True.

False.

5. If you're concerned about health-carecosts in retirement, you can just delay yourretirement in order to maintain youremployer-sponsored health benefits.

True.

False.

Answers1. True. The average inflation rate from 2010 to2017 was less than 2%, while the averagespending on prescriptions, doctors, andhospitals grew between 4% and 5%. From1970 to 2017, annual per-capita out-of-pocketspending on health care grew from about $600to approximately $1,100 (in 2017 dollars).1

2. True. In 2017, America's Health Rankingsprojected that a 45-year-old couple retiring in20 years could need about $600,000 to covertheir health-care costs, excluding the cost oflong-term care. The same report projected thatabout 70% of those age 65 and older will needsome form of long-term care services. Andaccording to the Department of Health andHuman Services, the average cost of aone-year stay in a nursing home (semi-privateroom) was $82,000 in 2016.2

3. False. Original Medicare Parts A and B helpcover inpatient hospital care, physicians' visits,preventive care, certain laboratory andrehabilitative services such as physical therapy,and skilled nursing care and home health carethat are not long term. Medicare Part D helpscover the cost of prescriptions (within certainguidelines and limits). Medicare does not coverseveral other costs, including long-term care,dental care, eye exams related to eye glasses,and hearing aids. Seniors may need topurchase additional insurance to cover theseand other services not covered by Medicare.3

4. False. Interestingly, America's HealthRankings found that the five healthiest statesfor seniors were (1) Utah, (2) Hawaii, (3) NewHampshire, (4) Minnesota, and (5) Colorado.4

5. Maybe true, maybe false. Many peoplebelieve they will work well into their traditionalretirement years, both to accumulate as large anest egg as possible and to take advantage ofemployer-sponsored health benefits (if offeredbeyond Medicare age). While this is anadmirable goal, you may not be able to controlwhen you actually retire. In a 2018 retirementsurvey, nearly 70% of workers said theyplanned to work beyond age 65; 31% said theywould retire at age 70 or older. But the reality isthat nearly 70% of current retirees retiredbefore age 65. Many of those individuals retiredearlier than planned due to a health problem,disability, or other unforeseen hardship.5

The bottom line is that while it's hard, if notimpossible, to predict your future health needsand health-care costs, it's important to workthese considerations into your overallretirement planning strategies. Take steps nowto keep yourself healthy — eat right, exercise,get enough sleep, and manage stress. And besure to account for health-care expenses inyour savings and investment strategies.1 Consumer Price Index, Bureau of Labor Statistics,2018, and Peterson-Kaiser Health System Tracker,2018

2 Preparing for Health Care Costs in Retirement,America's Health Rankings, 2017, andLongTermCare.gov, 2018

3 Medicare.gov

4 Senior Report, America's Health Rankings, 2018

5 2018 Retirement Confidence Survey, EmployeeBenefit Research Institute

According to the 2018Senior Report fromAmerica's Health Rankings,social isolation isassociated with increasedmortality, poor health status,and greater use ofhealth-care resources. Therisk of social isolation forseniors is highest inMississippi and Louisianaand lowest in Utah and NewHampshire.

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Four Reasons Your Parents Might Be in Financial TroubleAs your parents age, they will probably needmore help from you. But it may be difficult toprovide the help they need, especially if they'reexperiencing financial trouble.

Money can be a sensitive subject to discuss,but you'll need to talk to your parents about it inorder to get to the root of their problems andcome up with a solution. Before you start theconversation, consider the following fourscenarios as signs that your parents might beexperiencing financial challenges, and how youcan make things easier for them.

1. They are dealing with debtPerhaps your parents have fallen behind ontheir mortgage or credit card payments. Maybethey're dealing with the aftermath of a large,unexpected medical bill. Or it could be thatyears of generously supporting their childrenand grandchildren have left their finances inshambles.

Whatever the cause, debt among olderAmericans is a growing trend. In 2010, theaverage debt for a family in which the head ofhousehold was age 75 or older was $30,288. In2016 (most recent data available), that numbergrew to $36,757.1

2. They are falling for fraudAccording to a report by the Federal TradeCommission, older adults have been targetedor disproportionately affected by fraud.Moreover, older adults have reported muchhigher dollar losses to certain types of fraudthan younger consumers.2

Why do scammers target older individuals?There are many explanations for this trend.Some older individuals lack an awarenessabout major financial issues. Others may beattractive targets for scammers because theyhave access to retirement account assets orhave built up home equity. Additional factorsthat increase an older adult's vulnerability toscams include cognitive decline and isolationfrom family and friends.

3. They aren't used to managingfinancesThe loss of a spouse can create manychallenges for the survivor, especially if thedeceased spouse was in charge of finances.Many widows or widowers might findthemselves keeping track of statements, payingbills, budgeting, and handling other financialmatters for the first time, which can be acomplicated reality to face.

4. They struggle with changeAs financial institutions continue to innovateand increase online and mobile access tocustomer accounts, it can be difficult for olderconsumers to keep up. For example, someolder adults may struggle with accessing theirfinancial information online. Others might getfrustrated or confused when financialinstitutions implement new policies andprocedures, especially if they've had anaccount with an institution for decades.

One report described the most common issuesthat older consumers identified with bankaccounts or services. The top three complaintsinvolved account management (47%), depositsand withdrawals (27%), and problems causedby low funds (12%).3

Ways you can helpRegardless of the reasons why your parentsmight be having money problems, there aresteps you can take to help them.

• Set up a meeting with a financialprofessional. Encourage your parents tomeet with a professional to evaluate theirfinancial situation.

• Help them reduce spending. Look for bigand small ways that they can scale back onexpenses, such as downsizing to a smallerhome, cutting cable plans, or cancelingunnecessary memberships/subscriptions.

• Have them tested for dementia. If you'venoticed behavioral or memory changes in oneor both of your parents, share your concernswith a medical professional. Cognitive declinecan result in difficulty managing finances.

• Lend money (using caution). If you decideto help your parents monetarily, considerpaying your parents' expenses directly ratherthan giving them cash so you can ensure thattheir bills are paid on time.

• Help them apply for assistance. TheNational Council on Aging has a website,BenefitsCheckUp.org, that can help youdetermine your parents' eligibility for federal,state, and private benefit programs.

1 Debt of the Elderly and Near Elderly, 1992-2016,Employee Benefit Research Institute, 2018

2 Protecting Older Consumers: 2017-2018, FederalTrade Commission, 2018

3 Monthly Complaint Report, Vol. 23, ConsumerFinancial Protection Bureau, May 2017

When retirees were askedabout their overall expensesand spending in retirement,37% said they were higherthan expected, 52% said theywere about what theyexpected, and just 8% saidthey were lower than expected.

Source: 2018 RetirementConfidence Survey, EmployeeBenefit Research Institute

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CFS, Inc.Michael Butler, CFA® InstitutePresident/Financial Advisor3190 Whitney AvenueBuilding 6, Suite 2Hamden, CT 06518203-248-1972cfs@cooperfinservices.comwww.cooperfinservices.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019

IMPORTANT DISCLOSURES

Cooper Financial Services, Inc. doesnot provide investment, tax, or legaladvice. The information presentedhere is not specific to any individual'spersonal circumstances. Securitiesoffered through our affiliateBroker/Dealer, CFS Securities, Inc.,Member FINRA & SIPC.

To the extent that this materialconcerns tax matters, it is notintended or written to be used, andcannot be used, by a taxpayer for thepurpose of avoiding penalties thatmay be imposed by law. Eachtaxpayer should seek independentadvice from a tax professional basedon his or her individualcircumstances.

These materials are provided forgeneral information and educationalpurposes based upon publiclyavailable information from sourcesbelieved to be reliable—we cannotassure the accuracy or completenessof these materials. The information inthese materials may change at anytime and without notice.

How much does child care really cost?Typical child-care fees vary widely by state, as do other living costs. But in all regions, theaverage annual cost of center-based care for one infant now exceeds the average amount ofmoney families spend on food and transportation combined. Child-care costs for two childrenexceed the median cost of housing for homeowners with a mortgage in 35 states and the Districtof Columbia.

How can I get a tax break for child care?More than 60% of childrenunder age six in the UnitedStates have two parents in theworkforce.1 Many of theseworking parents must spend a

burdensome share of their earnings on childcare, especially if they don't have relatives whoare willing and able to help out.

The following tax benefits may help you offsetsome of the costs paid for a nanny, babysitter,day care, preschool, or day camp, but only ifthe services are used so you can work.

Child-care tax creditFamilies with one qualifying child (typically age12 or younger) can claim up to $3,000 per yearin child-care expenses; those with two or morequalifying children have a $6,000 annual limit.The credit is worth 20% to 35% of eligiblechild-care expenses, depending on income. Asincome rises, the credit amount drops until ithits a minimum of 20% for households with$43,000 or more in adjusted gross income.

For example, families with one qualifying childcan receive a credit of $600 to $1,050; thosewith two or more children can receive a credit of$1,200 to $2,100. A tax credit lowers a family'stax liability dollar for dollar.

Dependent-care flexible spendingaccount (FSA)Higher-income families may realize a bigger taxbenefit from an FSA if it is offered by anemployer. Up to $5,000 a year can be set asideto cover eligible child-care costs for qualifyingchildren, and this money is free of federalincome tax and Social Security and Medicaretaxes. You are not allowed to use pre-taxmoney from an FSA and take a credit for thesame expenses. However, after spending$5,000 from an FSA, you may take a tax creditfor up to $1,000 in additional child-careexpenses if you have more than one child.1 Child Care Aware® of America, 2017

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